Keppel O&M Posts 4Q 2015 Net Loss of $42.5M, Updates on Brazil Contracts

Singapore's Keppel Corp. Ltd.'s subsidiary Keppel Offshore & Marine Ltd. (Keppel O&M) posted a net loss of $42.54 million (SGD 61 million) for fourth quarter 2015 (4Q 2015), down from a net profit of $200.18 million (SGD 287 million) in the previous year, with the decline attributed to lower volume of work and deferment of some projects, the firm said in the release of its financial results Thursday.

Turnover fell 44 percent to $923.1 million (SGD 1.323 billion) in 4Q 2015, compared to $1.66 million (SGD 2.376 billion) a year ago as Keppel O&M's share of the conglomerate total revenue shrank to 53 percent from 61 percent in the corresponding period.

Keppel O&M delivered seven of the 15 jackups planned for 2015 as eight were deferred into the first half of 2016, comprising five for Grupo R as well as one each for Parden Holdings, FTS Derricks and Perforadora Central. The company also delivered its first jackup of the year to Gulf Drilling International early Thursday.

Meanwhile, Keppel O&M delivered seven non-drilling solutions last year, including a Depletion Compression Platform to Shell Philippines Exploration, an accommodation semisub to Floatel International and the FPSO (floating production, storage and offloading) Turitella to SBM Offshore.

Given the current weak demand for rigs, the company revealed that non-drilling solutions made up a third of its net orderbook of $6.31 billion (SGD 9.047 billion) as of end 2015 -- including $1.26 billion (SGD 1.8 billion) non-drilling contracts secured for 2015 -- while jackup contracts under the deferred payment terms constitute less than 16.67 percent or less than $1.05 billion (SGD 1.5 billion). It planned to deliver around 25 newbuild and conversion projects this year.

Looking ahead, Keppel cautioned that current low oil prices is not sustainable in the long run. The company noted industry reports that global exploration and production spending could fall by 15 percent or more in 2016 should oil prices remain at current levels.

"However, oil companies are kicking the can down the road and at some point, they would have to spend to replenish reserves. The low oil prices we see today are not sustainable in the long run. How soon the new equilibrium will be reached remains to be seen. We have to plan for a longer winter," Keppel's CEO Loh Chin Hua said in the press release.

Keppel Updates on its Brazil Projects

Keppel O&M, an active player in Brazil's newbuild drilling market, had taken steps to mitigate its exposure by slowing the construction of Sete Brasil Participacoes SA’s rigs after payments from the latter ceased over a year ago amid the South American country's political and economic problems, including those linked to the corruption probe.


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